Monday, February 28, 2011


Here is another step in the right direction by our Comptroller. Comptroller Liu is advocating for annual elections of board members for firms that NYC Pension Funds invest in. The ability of shareholders to elect board members increases shareholder oversight of the corporations. So far Capital One Financial Corp. and Adobe Systems Inc. have agreed to endorse the change.


Capital One, Adobe Agree to Significant Change in Election of Board Directors
NEW YORK, NY – Comptroller John C. Liu today announced that Capital One Financial Corp. and Adobe Systems Inc. have agreed to support annual elections for their board directors in a move that will improve shareholder oversight of their operations. The NYC Pension Funds had called on the firms in a shareholder resolution to reform their annual elections.

Currently, their boards protect the status quo by having directors serve staggered terms with elections at different intervals. These so-called “classified” or “staggered” boards can stifle the voices of shareholders and make it nearly impossible to replace a board majority. They can prevent takeovers that directors and management may oppose even when a majority of shareholders support the transaction.

“Staggered boards protect the interests of corporate directors and make it difficult for shareholders to hold individual directors accountable for poor performance,” Comptroller Liu said. “The boards of Capital One and Adobe Systems should be commended for taking steps to ensure that their directors answer to shareholders on an annual basis. They are leading by example. This reform should inspire other firms should make the same changes to reduce financial risk that is counter to the interests of our pensioners and taxpayers.”

Capital One and Adobe must still obtain a majority of shareholders’ approval at their spring meetings to make the switch to annual elections for all board members. Because the firms have agreed to endorse the change at their spring meetings, the NYC Pension Funds’ withdrew its resolution from consideration.

The Pension Funds also submitted the shareholder request to Alere Inc. (NYSE: ALR), Juniper Networks (NYSE: JNPR) and Neurocrine BioSciences, Inc. (NASDAQ: NBIX), which all maintain staggered boards. The request will be voted on during the firms’ spring shareholder meetings.

The New York City Comptroller serves as the investment advisor to, custodian and trustee of the New York City Pension Funds. The New York City Pension Funds are the: New York City Employees’ Retirement System, Teachers’ Retirement System, New York City Police Pension Fund, New York City Fire Department Pension Fund, and Board of Education Retirement System. The New York City Pension Funds hold a combined 5,324,806 total shares in Adobe Systems (NASDAQ: ADBE), Alere Inc. (NYSE: ALR), Capital One Financial Corp. (NYSE: COF), Juniper Networks (NYSE: JNPR) and Neurocrine BioSciences, Inc. (NASDAQ: NBIX) for a combined asset value of $216,035,826.71 as of 02/22/2011.

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